THE BLOG

Small Loans Can Make a Big Difference for Entrepreneurs

05/14/2014 03:48 pm ET | Updated Jul 14, 2014

Small businesses are responsible for half the nation's economy and employ half of our workforce, but behind these numbers are millions of personal stories of hard work, sacrifice, and success. With Small Business Week upon us, we would like to share the story of two of these job creators and the big boost they received from small loans provided to them by an innovative Chicago program.

Lillia's mother, grandmother and great aunts taught her how to cook - and how to throw a good party. Growing up in Chicago's Englewood community, Lillia never lost her passion and flare for cooking. She developed her technical expertise at culinary school and started her own business: Lenore's Kitchen Catering.

Last year, Lillia needed funding to upgrade equipment, expand her business and reach new customers. She received a $15,000 microloan from the Chicago Microlending Institute (CMI) - a collaboration between the City of Chicago, Citi, the Searle Funds at The Chicago Community Trust, and Accion Chicago. Originally working out of her home in Morgan Park, Lillia now has seven part-time employees providing high quality catering from her commercial kitchen in Marquette Park.

Lillia's story reminds us why small businesses matter to individuals, communities and cities. In Chicago, more than 20 percent of the city residents work for firms with five employees or less, and many of these businesses are located in low- to moderate-income neighborhoods. Historically, businesses of this size have found it difficult to access credit and capital through traditional channels. Since its formation in 2011, CMI, a first-in-the-nation institute, has trained new lenders to make targeted loans to small businesses in the city.

The good news is that our initiative is working. CMI is creating jobs and getting capital to small business owners who need it. So far, the program has disbursed 126 microloans totaling $1.1 million and created more than 240 jobs. Seventy-seven percent of loans approved through the program have gone to Chicago's minority-owned business, 57 percent to women and 61 percent to low-income individuals.

But behind those statistics are stories of courage, enterprise and ingenuity that show time and time again that entrepreneurship is still an effective pathway toward economic self-sufficiency. Take Orlando (Steve) Rangel, who with an $8,000 microloan through CMI, started The Jumper Store, a seasonal bounce-house and party rental business. Steve works full time as an auto repair man, but has built the business to support his family of five children. Today, Steve has 13 employees - that is 13 people benefitting from a steady paycheck.

Whether it's purchasing new equipment or paying employees, access to working capital is vital to the success of small businesses, and small businesses are vital to the success of our communities. There is still work to be done, and the demand for microloans in Chicago continues to grow. But stories like Lillia's and Steve's show the progress we are making helping entrepreneurs open their doors, operate and expand.

Rahm Emanuel is Mayor of Chicago, Bob Annibale is Global Director of Citi Community Development and Microfinance, and Jonathan Brereton is the Chief Executive Officer of Accion Chicago.